IP Law Daily, TECHNOLOGY/INTERNET: U.S. sees progress in persuading China to cease cyber espionage, (Sep 28, 2015)

By Tom Leithauser, TR Daily

The Obama administration appears to have made significant progress in its efforts to persuade the Chinese government to stop using cyberspace for economic espionage during last week’s state visit to Washington by Chinese President Xi Jinping.

On September 25, the two sides announced an agreement “that neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors,” the White House said.

“This is progress,” President Obama said during a joint news conference with President Xi. “But I have to insist that our work is not yet done. I believe we can expand our cooperation in this area, even as the United States will continue to use all of the tools at our disposal to protect American companies, citizens, and interests.”

“The question now is, are words followed by actions,” Mr. Obama added. “We will be watching carefully to make an assessment as to whether progress has been made in this area.”

President Xi’s visit to the U.S. generated speculation about whether China’s leaders were ready to reopen discussions about cyber espionage. The Chinese government has been blamed for a series of network breaches of U.S. companies and government agencies, including the recent cyber theft of personal information from the networks of the U.S. Office of Personnel Management.

Some members of Congress and outside experts had suggested that sanctions might be the appropriate response for the OPM breach. But White House officials hinted that such sanctions were unlikely unless the U.S. and China were unable to make progress on the issue during President Xi’s visit this week.

Such progress seemed far from certain. At their most recent meeting in Beijing last November, President Xi declined to discuss cybersecurity with President Obama, continuing a policy that began after five Chinese military officers were indicted in a U.S. court on computer hacking charges.

Before that, Mr. Xi and President Obama had agreed in June 2013 to establish a working group that would attempt to narrow differences between the U.S., which regards economic cyber espionage as unacceptable, and China, which has been characterized as viewing such activity as a normal national security pursuit. The indictments led China to suspend its participation in the working group.

Now the two sides appear to be back on track. “I think it’s fair to say we’ve reached a lot of consensus on cybersecurity, including some new consensus,” President Xi said. “We have broad, common interest in the field of the cyber. But we need to strengthen cooperation and avoid leading to confrontation.”

In addition to the agreement on cyber espionage, the U.S. and China said they would “cooperate, in a manner consistent with their respective national laws and relevant international obligations, with requests to investigate cyber crimes, collect electronic evidence, and mitigate malicious cyber activity emanating from their territory,” the White House said.

“Both sides are committed to making common effort to further identify and promote appropriate norms of state behavior in cyberspace within the international community,” the White House added. A starting point in developing those norms will be the July 2015 report of the United Nations Group of Governmental Experts in the Field of Information and Telecommunications.

The U.S. and China also agreed to “establish a high-level joint dialogue mechanism on fighting cyber crime and related issues,” the White House said. On the U.S. side, the secretary of Homeland Security and the Attorney General will co-chair the dialogue, with participation of representatives from the Federal Bureau of Investigation, the U.S. intelligence community, and other agencies.

“This mechanism will be used to review the timeliness and quality of responses to requests for information and assistance with respect to malicious cyber activity of concern identified by either side,” the White House said.

“As part of this mechanism, both sides agree to establish a hotline for the escalation of issues that may arise in the course of responding to such requests,” it said. “Finally, both sides agree that the first meeting of this dialogue will be held by the end of 2015, and will occur twice per year thereafter.”

In a statement issued after President Obama and Mr. Xi announced their agreement, Sen. Tom Carper (D-Del), ranking member of the Senate Homeland Security and Government Affairs Committee, struck a cautious note regarding the agreement.

“Today’s agreement marks encouraging progress toward better protecting our nation’s ideas and ingenuity. It also represents a significant step toward building a long-term and robust pact on cybersecurity with China,” he said. “That being said, we can’t just believe what China says. We also have to see what they do and continue to monitor their actions in cyberspace very closely.”

“I know some of my colleagues will say that this agreement doesn’t do enough. But we must start somewhere and this is more than a good start . . . . In order for this agreement to be successful, everyone must do their part to uphold their end of the deal, including the United States. If we can get this agreement fully implemented, it will be a major achievement.

Senator Carper also repeated his call for congressional action on legislation to encourage sharing of cyber threat data between the private sector and the federal government. “Congress also has a responsibility to continue to help our nation strengthen its cyber defenses, including passing an information sharing bill, which is critical to our national security as well as the security of many companies across our country. I look forward to working with my colleagues in Congress and the Administration as we continue this important effort.”

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